It is worth looking at some of these early models to grasp better how people's perceptions of what makes a customer "tick" have changed over time and how each distinct input from adjacent professions has advanced the available information in this sector.
In this section, we examine micro and macroeconomic models from the field of economics, various sociological models, and the resulting explanations of buyer behavior.
Major models of buying behaviours of consumers are −
The economic theory, which essentially explains behavior by allocating scarce resources among infinite needs and desires, has provided contrasting perspectives on the consumer from the standpoint of its sub-disciplines, namely microeconomics, and macroeconomics. The fact that these models continue to affect customer perceptions demonstrates their strength.
The microeconomic method was founded on how an 'average' customer spends his resources and then draws generalizations about aggregates of such typical consumers in the economy. The emphasis was on purchasing regarding what the customer bought and how much was spent. The interaction of requirements and motivation and the prioritization of these preferences should have been considered while constructing the models. The following assumptions underpin the microeconomic theory of consumer choice-making
Because consumer demands and desires are infinite, they can never be delighted.
Because consumer resources are limited, he would spend his money in a way that maximizes the satisfaction of his needs and desires.
Customers are fully aware of the usefulness of each product and service, i.e., they can calculate the precise satisfaction that each thing is expected to generate.
According to the law of declining marginal utility, when more units of the same thing are purchased, the marginal benefit or satisfaction the following item unit offers decreases.
Price is employed to measure the sacrifice to receive the products and services.
The consumer aims to maximize his delight from purchasing highly sensibly.
The approach improves our knowledge of some elements of consumer behavior, but the explanations it provides are pretty restricted. Its insufficiency stems from the unrealistic core assumptions upon which the model's theory is founded. According to research, most customers want appropriate levels of satisfaction rather than maximum levels of satisfaction. Consumers need to gain complete knowledge about the usefulness of any item they attempt to decide on.
Customers are only sometimes reasonable in their purchases. In addition to the 'price,' customers consider several criteria to determine the 'sacrifice' or expense they will incur while acquiring products and services. Nevertheless, in some situations, high costs may be advantageous since, without other accessible indications, the customer perceives price as an indicator of quality. The model is also silent on the procedures that occur before and after the actual act of purchasing.
Notwithstanding these limitations, the model gives a helpful perspective. Many marketers feel that the more logical a particular purchase (for example, purchasing equipment in an industrial context), the closer the application of the microeconomic model to the act of purchase.
Macroeconomics, the study of aggregate flows in the economy, their direction, and changes over time, attempts to make generalizations about consumer behavior, which influences these flows through their actions. Two macroeconomic factors are critical to our understanding of consumer behavior. The relative income hypothesis and the perpetual income hypothesis are two of them.
The relative income theory is based on an intriguing fact. Higher-income families spend a smaller proportion of their disposable income than lower-income households. These proportions do not alter when economic advancement increases income levels. According to the relative income hypothesis, as people's consumption standards become more influenced by their social groups and peers, the proportion of a family's income relative to others is likely to change only when the increase in income is significant enough to place the family in a different social setting.
On the other hand, the constant income theory explains why people hesitate to change their purchasing habits even when their income suddenly changes. Consumers are affected by their view of some average amount that may be spent without disrupting their acquired wealth, rather than assessing "real" income in a specific time to decide the level of their consumption spending, according to the idea.
Thus far, the study of behavior has been focused on the individual as a solitary entity, with no mention of the effect of the social environment on the individual's psychology. Nonetheless, a substantial quantity of information has been amassed through the research of numerous social scientists, which gives insights into specific areas of social effect on consumer behavior. According to the sociological concept, man's wants and behavior are determined mainly by and formed by social groupings and factors. Humans tend to draw cues from culture, subcultures, social class reference groups, and family for their needs and goals and how to satisfy them.
The social theorist Thorstein Veblen (19th century) claimed that "individuals are members of diverse social groups, and they tend, under normal circumstances, to conform to mainly unwritten but still powerful behavioral standards or norms of these social groupings." They sometimes imitate the behavior standards of the higher-status groups they aspire to.
In future years, multiple social researchers verified and reaffirmed that the purchase of various products and services by individuals is likely to be substantially impacted by the norms of the group to which they belong or wish to join. The key influences on individual behavior are the family, culture, and subcultures surrounding the person, the reference group to which he belongs or wishes to belong, and socioeconomic status.
Marketers have always been fascinated by the customer decision-making process since the consumer's decision to buy or reject a product or service is the ultimate litmus test for the effectiveness of a particular marketing plan. Theories of consumer choice-making differ depending on the researcher's assumptions about human behavior.
Many models in the section show consumers and their decision-making processes in various ways, depending on the researchers' point of view in each case. The many schools of thinking provide intriguing answers for why a customer behaves as he does.
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